Elektrokrajna power distribution project

Location:

Bosnia and Herzegovina

Project number:

47658

Business sector:

Energy

Notice type:

Public

Environmental category:

B

Target board date:

14 Dec 2016

Status:

Disbursing

PSD disclosed:

18 May 2016

Translated version of this PSD: Bosnian

Project Description

The EBRD is considering to extend a EUR 15 million senior corporate loan to ZP Elektrokrajina a.d. Banja Luka, an electricity distribution company established under the laws of Republika Srpska in Bosnia and Herzegovina for the (i) reconstruction of medium and low-voltage networks, (ii) the reconstruction of substations and (iii) the introduction of smart metering in the territory covered by ZP Elekrokrajina.

Project Objectives

The project will support ZP Elektrokrajina to reach its strategic objectives of a) reducing losses through the installation of new protected cables and substations as well as new meters with remote reading and disconnection features; b) improving collections by reducing receivables aging. These receivables are collected using legal procedures which are lengthy and time-consuming. With the introduction of smart meters the company will have better control of this; c) improving the quality of supply with the replacement of substations and the reconstruction of networks in the most populated areas.

Transition Impact

The project is expected to lead to operational improvements in the grid, in particular to reduce distribution losses through the reconstruction of medium and low-voltage networks and the introduction of advanced metering. Moreover, the Bank will engage with ZP Elektrokrajina to perform a thorough corporate governance review and recommendation how to bring the company to best international standards in compliance with international norms and codes.

Client Information

ELEKTROKRAJINA A.D. BANJA LUKA

ZP Elektrokrajina is a power distribution company servicing approximately 50 per cent of consumers (or 16 municipalities) in the Republika Srpska in Bosnia and Herzegovina. The company is majorityowned (65 per cent) by Elektroprivreda Republike Srpske (EPRS), one of the three national energy utilities 100 per cent-owned by the Government of Republika Srpska that cover electricity generation and distribution in Republika Srpska. Elektrokrajina employs some 1,700 employees and is the largest distribution subsidiary (out of a total of 5 distribution subsidiaries in EPRS).

EBRD Finance Summary

EUR 15,000,000.00

The EBRD loan will be EUR 15,000,000

Total Project Cost

EUR 15,000,000.00

The full amount of the proceeds will be used to finance the CAPEX for the project.

Environmental and Social Summary

Categorised B (2014 ESP). Upgrading of the existing distribution networks and smart metering is mainly expected to result in environmental and social benefits. Environmental and social risks and impacts are mainly site specific and limited to the installation and construction works. No land acquisition or works in protected areas are expected. Nevertheless, a number of mitigation measures have been agreed with the Company and included in an Environmental and Social Action Plan to structure the Project to meet EBRD’s 2014 Performance Requirements. Opportunities to maximise the benefits from smart metering for the end-users were also discussed with the Company.

An Environmental and Social Due Diligence (“ESDD”) was carried out by the Bank’s environmental and social specialists. The scope of the ESDD included meetings with Elektrokrajina central office and regional departments in charge of quality assurance, environment, public and client relations, human resources and health and safety management. Elektrokrajina’s largest workshop and storage sites were also visited, as well as worksites in the publicly accessible locations. Due to the nature of its activity, the company mostly works in remote inhabited rural and urban areas. The ESDD confirmed that the anticipated additional environmental and social risks and impacts associated with the Project are limited and that the Project does not require an Environmental Impact Assessment or any additional environmental permit or authorizations as per the national legislation.

The company has been operating since 2011 under an integrated management system certified ISO9001, ISO14001 and OHSAS18001 and its commitment to continuous improvement is reflected in good environmental and social performance throughout the Company's operations. Occupational health and safety has continuously improved since the introduction of the certified management system. The last fatal accident occurred 2 years ago and was caused by an electrocution. Annually, the company records 4 to 5 serious accident (injury with lost work time). The main causes are: electrocutions, cuts, falls and road accidents. Accidents are analysed and corrective actions implemented through the OHSAS 18001 procedures of the Company.

The ESAP requires the Company to implement, among others, the following measures:

  • Maintain the ISO9001, ISO14001 and OHSAS18001 certifications;
  • Develop and implement a Corporate Social Responsibility (CSR), following preferably ISO26000 standard, including public safety and awareness raising;
  • Develop and implement a Birds Protection Plan through the ISO14001 management system;
  • Conduct a survey with a representative panel of customers in order to:

    - Improve the management of planned disruptions, with a focus on notification time and media. Adjust the disruption notification procedure accordingly;

    - Inform the customers about the various benefits related to smart metering for the domestic users (home displays, consumption follow-up tools, new payment methods, etc.); and

    - Test the consumer expectations and preferences with regards to these potential benefits.

The Bank will monitor the project’s environmental and social performance and compliance with the ESAP and the EBRD PRs by reviewing annual reports prepared by the Borrower on environmental and social matters. The Bank will also undertake monitoring site visits, as needed.

Non-technical summary

Technical Cooperation

  • “Support to the company by a PIU consultant during preparation and implementation, EUR 250,000, provided by the Austrian Programme Account DRIVE (Delivering Resource Efficiency Investments in the Western Balkans and Turkey);
     
  • CSO capacity building TC: ‘Working with Civil Society to Promote Sustainable Energy’, which aims to enhance the capacity of local CSOs in terms of technical knowledge, communication, outreach and policy advocacy as well as the awareness of the public about the benefits and functioning of smart metering technology. EUR 70,000, Donor to be defined;
     
  • Support to the Company to prepare a Bird Protection Plan, EUR 50,000 provided by the EBRD Shareholder Special Fund (SSF). The TC includes the preparation of a bird protection plan that would allow mainstreaming bird protection in the Company’s ISO 14001 certified environmental management system.

Company Contact Information

Seka Kuzmanovic
direkcija@elektrokrajina.com
0038751246300
0038751215610
www.elektrokrajina.com

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